Correlation Between North Energy and MPC Container

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Can any of the company-specific risk be diversified away by investing in both North Energy and MPC Container at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining North Energy and MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and MPC Container Ships, you can compare the effects of market volatilities on North Energy and MPC Container and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in North Energy with a short position of MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and MPC Container.

Diversification Opportunities for North Energy and MPC Container

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between North and MPC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships and North Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on North Energy ASA are associated (or correlated) with MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of North Energy i.e., North Energy and MPC Container go up and down completely randomly.

Pair Corralation between North Energy and MPC Container

Assuming the 90 days trading horizon North Energy is expected to generate 2.27 times less return on investment than MPC Container. But when comparing it to its historical volatility, North Energy ASA is 1.48 times less risky than MPC Container. It trades about 0.1 of its potential returns per unit of risk. MPC Container Ships is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,438  in MPC Container Ships on April 24, 2025 and sell it today you would earn a total of  385.00  from holding MPC Container Ships or generate 26.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

North Energy ASA  vs.  MPC Container Ships

 Performance 
       Timeline  
North Energy ASA 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in North Energy ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, North Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.
MPC Container Ships 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in MPC Container Ships are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, MPC Container disclosed solid returns over the last few months and may actually be approaching a breakup point.

North Energy and MPC Container Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with North Energy and MPC Container

The main advantage of trading using opposite North Energy and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, MPC Container can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MPC Container will offset losses from the drop in MPC Container's long position.
The idea behind North Energy ASA and MPC Container Ships pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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